Regional pay

Published Sat 29 Nov 2003

Issue No. 1879

THE TREASURY has given the clearest signal yet that it wants to introduce regional pay bargaining as a way of depressing workers' earnings. A 'guidance note' issued this week from Gordon Brown's department says the policy could produce a few cases of higher pay in a small number of areas in London and the south east to overcome recruitment and retention difficulties. But it could also produce pay reductions 'where there is currently too high a premium relative to the rest of the labour market'.

The note goes on to make clear that 'the government will be looking for local pay considerations to be incorporated into future revisions of all pay and workforce strategies', starting next year as pay deals come up for renewal. Overall the pay budget is set to fall because the government wants to move at least 20,000 civil service jobs out of London, and see more civil service call centres in lower paid parts of the country.

Government departments and agencies are being told to gather evidence on vacancy rates, recruitment difficulties and other factors, including whether 'the current package of benefits offered is sufficient or excessive'. The unions should be ready for a big fight. It is clear that pay cuts are on the way.

The unions should also insist that London weighting and other similar payments are about the cost of living, not recruitment and retention. Otherwise the government will apply these payments only when they find it hard to get the workers they want.

For example, the Treasury highlights Tesco's varying pay bands as good practice. Tesco puts employees in Woodford Green and Romford on the edge of London in a lower pay band, as 'it was felt there was no need to pay the full London rate'. This is because Tesco says there are enough recruits in these areas.